accounting 3 chapter 21 section 3. preparing plant asset records a separate record is kept for each...

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Accounting 3 Accounting 3 Chapter 21 Chapter 21 Section 3 Section 3

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Page 1: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Accounting 3Accounting 3

Chapter 21Chapter 21

Section 3Section 3

Page 2: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Preparing Plant Asset RecordsPreparing Plant Asset Records

A separate record is kept for each plant A separate record is kept for each plant asset. This is called a asset. This is called a Plant Asset RecordPlant Asset Record..

Section 1 is prepared when the asset is Section 1 is prepared when the asset is purchased. It includes, the description, purchased. It includes, the description, account numbers, serial numbers, cost, account numbers, serial numbers, cost, etc.etc.

Section 2 provides space for recording the Section 2 provides space for recording the disposal information of the asset when it is disposal information of the asset when it is taken out of use.taken out of use.

Section 3 provides space for recording Section 3 provides space for recording annual depreciation expense and the annual depreciation expense and the changing book value each year it is used.changing book value each year it is used.

Page 3: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Plant Asset Record ExamplePlant Asset Record Example

Plant Asset Record No : ________ General Ledger Account No: __________

Description: ________________________ General Ledger Account: ___________________

Date Bought: _____________ Serial Number: __________________ Original Cost: _____________

Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________

Date: _________________ Disposal Amount: ____________________

Year Annual Depreciation Expense

Accumulated Depreciation Ending Book Value

Page 4: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Journalizing Annual Depreciation Journalizing Annual Depreciation ExpenseExpense

At the end of the fiscal year, after each At the end of the fiscal year, after each plant assets depreciation has been plant assets depreciation has been figured and recorded, the total figured and recorded, the total depreciation expense for all plant assets depreciation expense for all plant assets in the same plant asset account is in the same plant asset account is calculated.calculated.

In example, the depreciation expense of In example, the depreciation expense of all plant assets in the store equipment all plant assets in the store equipment account would need to be calculated.account would need to be calculated.

Page 5: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Journalizing Annual Depreciation Journalizing Annual Depreciation ExpenseExpense

To journalize the depreciation expense of a To journalize the depreciation expense of a plant asset account, an adjusting entry must plant asset account, an adjusting entry must be made using two accounts in the General be made using two accounts in the General Journal.Journal.

First is First is Depreciation Expense- (type of plant Depreciation Expense- (type of plant asset)asset). This account has a normal debit . This account has a normal debit balance and increases with a debit.balance and increases with a debit.

Second is Second is Accumulated Depreciation- (type Accumulated Depreciation- (type of plant asset)of plant asset). This account is used to keep . This account is used to keep track of all accumulated depreciation for track of all accumulated depreciation for each type of plant asset. It has a normal each type of plant asset. It has a normal credit balance (because it is a contra asset credit balance (because it is a contra asset account) and increases with a credit.account) and increases with a credit.

Page 6: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Winning Edge determined that total depreciation Winning Edge determined that total depreciation expense for store equipment is $8,750.00. After the expense for store equipment is $8,750.00. After the adjustment has been planned on the worksheet…adjustment has been planned on the worksheet…

General Journal Page ___

Date Account TitlePost

Ref.

Doc.

No.Debit Credit

15

31 Depreciation Expense-Store Equip.

8 7 5 0 00

Acc. Depr.-Store Equipment 8 7 5 0 00

Posting for this transaction is done in the same way any other posting for General Debit and Credit would be done.

Page 7: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Work Together p. 556On next four slides

Plant Asset Record No : ________ General Ledger Account No: __________

Description: ________________________ General Ledger Account: ___________________

Date Bought: _____________ Serial Number: __________________ Original Cost: _____________

Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________

Date: _________________ Disposal Amount: ____________________

Year Annual Depreciation Expense

Accumulated Depreciation Ending Book Value

134 1215

Television Store Equipment

January 4, 2001

15SG152 $700.00

3 years $100.00 Straight-Line

2001

2002

2003

$200.00

$200.00

$200.00

$200.00

$400.00

$600.00

$500.00

$300.00

$100.00

Page 8: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Plant Asset Record No : ________ General Ledger Account No: __________

Description: ________________________ General Ledger Account: ___________________

Date Bought: _____________ Serial Number: __________________ Original Cost: _____________

Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________

Date: _________________ Disposal Amount: ____________________

Year Annual Depreciation Expense

Accumulated Depreciation Ending Book Value

135 1205

Office Desk Office Equipment

May 27, 2001 GE572N $920.00

6 years $200.00 Straight Line

2001

2002

2003

$70.00

$120.00

$120.00

$70.00

$190.00

$310.00

$850.00

$730.00

$610.00

Page 9: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Account Title Trial Balance Adjustments

Debit DebitCredit Credit

Worksheet

Gabriel, Inc.

For Year Ended, December 31, 2003

Office Equipment 24 5 8 7 00

Accumulated Depreciation-Office Equipment 8 4 5 4 00

Depreciation Expense-Office Equipment

(f) 3 1 2 0 00

(f) 3 1 2 0 00

Page 10: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

General Journal Page ___

Date Account TitlePost

Ref.

Doc.

No.Debit Credit

18

31

Adjusting Entries

Dec

Depreciation Expense-Office Equip

6120 3 1 2 0 00

Acc. Depreciation-Office Equip

1210 3 1 2 0 00

Page 11: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

Account Acct No.

Date ItemPost

RefDebit Credit BALANCE

DEBIT CREDIT

Account Acct No.

Date ItemPost

RefDebit Credit BALANCE

DEBIT CREDIT

General Ledger

Accumulated Depreciation-Office Equipment

1210

Jan 1 Balance 8 4 5 4 00Dec 31 G18 3 1 2 0 00 11 5 7 4 00

Depreciation Expense-Office Equipment

6120

Dec 31 G18 3 1 2 0 00 3 1 2 0 00

Page 12: Accounting 3 Chapter 21 Section 3. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record

AssignmentAssignment

Do Application 21-3 and 21-4 by Do Application 21-3 and 21-4 by hand.hand.

Turn it into Mrs. Middleton.Turn it into Mrs. Middleton.Move on to Section 21-4.Move on to Section 21-4.